Here is a brief round-up of comments on today’s Budget. Contributors various.

Alex Gosling, CEO, online estate agents HouseSimple, comments: “Most people were expecting the threshold to be raised to £250,000 so an extra £50,000 will come as a surprise to many. And no-one expected the additional freeze for areas with higher priced houses. That will defintely be welcomed by first-time buyers in the south.

“Many will feel the Chancellor should have gone further and abolished stamp duty altogether. It’s an archaic tax that hurts the people who need help the most, and is nothing more than an easy way for the Treasury to fill its boots.”

“London is still a problem area, with our research showing that less than a third of homes are on the market currently at under £500,000, and will  benefit from the stamp duty exemption for first-time buyers. However, before the Budget just 0.3% properties on the market in the Capital would have been stamp duty exempt for first-time buyers, so this is defintely a step in the right direction.”

Jon Hales, Partner at transatlantic law firm Womble Bond Dickinson, said: “There was little in the Budget to help employers, who will see wage bills rise from next April as a result of the increase in the national living wage to £7.83 per hour.  The national minimum wage is due to increase as well.  There was a hint that the apprenticeship levy may be more flexible in future; this is being kept under review by the Government so we will have to wait and see what they propose.”

Jonathan Hopper, managing director of Garrington Property Finders, comments: “The Chancellor is tackling only part of the problem – the shortage of new homes, rather than the shortage of homes for sale.

“It’s a mistake made by politicians of all stripes. The lure of the building site photo opportunity, in which a beaming minister dons a hard hat to drive home the message ‘Britain is building again’, is all but irresistible to Westminster.

“Britain clearly needs to build many more homes to keep up with future demand. But the Chancellor’s excessive focus on this small part of the housing shortage misses the bigger, and more immediate, picture.

“Even if his plans do unleash a wave of new homebuilding, it’ll take years for the property market to see any significant benefit. The Chancellor is solving the problem of tomorrow but doing little to solve the problem of today – the abject lack of a fully functioning property market. The combination of high rates of Stamp Duty and falling real wages mean affordability is becoming a barrier for ever more would-be buyers.”

“The market is particularly snarled up at the top end, and cutting Stamp Duty for first-time buyers will do nothing to unblock it. The property market relies on the whole chain working, with buyers at all levels able to move up the ladder.

“There’s no point opening the floodgates at the bottom of the market if the higher levels remain dammed up by punitive levels of Stamp Duty and a broken demand and supply dynamic.”

Brian Palmer, tax policy expert, AAT, Association of Accounting Technicians. Britain’s waited 21 years for an Autumn Budget, but on this evidence Philip Hammond needs yet more time to come of age into his role as Chancellor. Undoubtedly hampered by poor productivity forecasts and the looming spectre of Brexit, Hammond’s austere approach will not leave the masses with a sense of economic comfort and stability in the months to come. Nonetheless, it’s not time for everyone to batten down the hatches, and the Chancellor threw in a few golden nuggets for first-time buyers, small businesses and those on low wages.

The cancellation of stamp duty for first-time buyers purchasing properties worth up to £300,000 was one of the show stopping moments from today’s speech. This removes a significant burden for many thousands of people who have been struggling to access the housing market, and will increase house purchases. However, it is of no value to other potential buyers. AAT will continue to call for stamp duty liability to be switched to the seller, so that people moving up the housing ladder would be paying duty on the (likely) lower-priced house they are selling, not the higher-priced one they are buying.

Calls for Stamp Duty to be scrapped altogether were a step too far, given this would have cost the Exchequer in excess of £11bn per annum, leaving a gaping hole in already squeezed public finances. Instead, this change will be far less costly for the Government, and will at least go some way to improving Britain’s housing mobility crisis and help both employment and productivity.

The decision to freeze the VAT registration threshold at £85,000 for two years, allowing the Office of Tax Simplification more time to work on their recent recommendations report, will act to the benefit of thousands of small businesses throughout the UK who will remain out of paying VAT altogether. Frankly, it would have been odd timing to make major reforms to VAT – it is, after all, governed by European legislation and as such will likely be further reviewed after our March 2019 withdrawal from the EU. Furthermore, after the debacle over a National Insurance rise in the Spring Budget, it would have been a very bold and unnecessary move for the Chancellor to implement at this time.

For the UK’s 5.5 million small businesses, news of a freeze in the corporation tax indexation allowance on chargeable gains arising in a company will prove to be some comfort. But the evidence is clearly there that SMEs are concerned about economic uncertainty given that they are holding in excess of £170 billion in current and deposit accounts, a six per cent rise on the previous year.    

Small businesses are not entirely trusting of bank lending given the recent threat from the FCA into RBS, and in addition many have been hit hard by rising business rates introduced in April 2017. We are pleased that the Chancellor announced the bringing forward of an indexation switch from RPI to CPI and the addressing of the ‘staircase tax’, helping to provide £2.3 billion of support to businesses to reduce the burden of the rates. However, we feel that more frequent re-evaluations of the rates would help SMEs budget more effectively for their future financial security.

Finally, while the increase in the National Living Wage to £7.83 from April 2018 was expected but nonetheless welcomed, we are disappointed that neither the simplification of ISA products nor the promotion of Apprenticeship Levy funds appeared to be on the Chancellor’s radar at this time.

Doug Monro, co-founder of Adzuna, comments: “Chancellor Phillip Hammond wasn’t quite right when he said at the weekend that there were no unemployed people in the UK, but the rate of employment is certainly at a historically favourable level. Nevertheless, there are still more than 1.4 million people out of work in the UK and our site currently carries more than 1.1 million vacancies. It is therefore encouraging to hear the OBR forecast another 600,000 more people in work by 2022.

“One of the most heartening aspects of Hammond’s Budget speech today was his commitment to jobs of the future, with £500m earmarked for projects around AI, 5G and fibre broadband and a stated desire to help tech start-ups reach scale. Britain is at the forefront of tech development and the intention to maintain and enhance this position is welcome.

“Money allocated to help transform cities outside the capital will also help keep the Northern Powerhouse and the Midlands Engine in full operational order. For the UK jobs market to hit top speed, all of our regions need to fire on all cylinders and further investment will help oil the wheels.”

Colin Morley, Professional Services Director at Harvey Nash Recruitment Solutions: “Another year, another budget, and another slap in the face to the UK’s contractor workforce. When changes to IR35 were introduced to the public sector in April, we all predicted it would only be a matter of time before they were introduced into the private sector. That day came a lot sooner than many might have expected, when Chancellor Philip Hammond announced the Autumn Budget.”

“The stance of Government is that these measures will help combat tax avoidance, ultimately benefiting the entire country and ensuring everyone pays their fair share. On the back of the Paradise Papers, it’s a very appealing proposition.”

“The unfortunate reality though is that the extension of the new IR35 rules will not have the desired impact. As Seb Maley, CEO at QDos Contractor points out, “The majority of skilled contractors are operating compliantly. Only 3 in over 1,600 IR35 cases we have handled have resulted in the contractor being deemed inside IR35. This is in direct contrast to HMRC’s proclamation that only 1 in 10 contractors pay the correct amount of tax – a comment which has no foundation whatsoever but which propagated the negative stance amongst public bodies.”

Public sector hurt
To say that the changes made to IR35 in the public sector in April were half baked would be generous. HMRC’s compliance tool seemed rushed and guidance was extremely vague. The resultant domino effect saw many public bodies adopt a panicked approach, where all contractors were deemed ‘inside IR35’, to which contractors either increased their rates to negate the new tax implications or moved to the private sector. In such cases, this translated into significant project delays and the loss of highly skilled talent.

Over half a year on and things are looking up for the public sector. As with any tax reform, the initial pushback is generally followed by a reluctant resignation that this is how things are and adjust to the new normal. At Harvey Nash Recruitment Solutions, we have been fortunate enough to work with a large number of public organisations to help them develop better, more objective workforce management practices and processes. This greater appreciation for total workforce planning is also causing public sector bodies to assess how they engage with contractors, their hiring practices and their long-term resourcing strategies.

Need for pragmatism
While businesses will see this as more unnecessary red tape, and contractors would be forgiven for thinking that the government views them as a soft target when it comes to increasing the exchequer’s coffers’, there is a genuine need for pragmatism if we are to avoid the disruption witnessed in the public sector.

Unlike them, we have a much clearer understanding of IR35 and the advantage of hindsight. More significantly, IR35 isn’t going to be introduced to the private sector immediately. There will likely be a consultation period. That means companies operating in the private sector have time to take all this information and adopt best practice processes to ensure minimal disruption.

As Mr Maley puts it, “It’s imperative for the private sector to understand that contrary to speculation these changes can actually be managed, much like in the public sector. What matters is that the companies which engage contractors are being proactive and taking the right steps to prepare for the roll-out of further reform.”